The following data relate to direct labor costs for the current period: What is the direct labor time variance?
A) $36,000 unfavorable
B) $35,000 unfavorable
C) $23,000 favorable
D) $22,000 favorable

Question

The following data relate to direct labor costs for the current period:  What is the direct labor time variance?
A) $36,000 unfavorable 
B) $35,000 unfavorable 
C) $23,000 favorable 
D) $22,000 favorable

Quizplus · Accepted Answer

The direct labor time variance can be calculated as follows:

Actual Direct Labor Hours - Standard Direct Labor Hours Allowed * Standard Direct Labor Rate

Actual Direct Labor Hours = 12,000
Standard Direct Labor Hours Allowed = 10,000
Standard Direct Labor Rate = $20/hour

Direct labor time variance = (12,000 - 10,000) * $20 = $40,000 favorable

Therefore, the correct answer is D, $22,000 favorable.

The Following Data Relate to Direct Labor Costs for the Current